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Climate Change

Volume 472: debated on Thursday 6 March 2008

7. What recent discussions he has had with Cabinet colleagues on the effects of climate change on the economy. (191848)

The Government are committed to reducing carbon emissions by 60 per cent. by 2050 through both domestic and international action.

My right hon. Friend may be aware of my private Member’s Bill, which seeks to make public sector buildings more energy efficient and comes before the House on 25 April; all are welcome. Has he done any cost-benefit analysis on moving public sector buildings into the top quartile of energy performance?

I know that my hon. Friend is introducing that private Member’s Bill, and she is right to raise the issue because it is important that at every single stage we do everything we can to reduce carbon emissions. I remind the House that through the Climate Change Bill that is currently passing through Parliament we will be the first Government in the world to impose a discipline on ourselves that will require us to meet the objectives we have set; there will not be room for Governments to escape the consequences of that. It follows, of course, that all buildings must play their part in ensuring that we emit less carbon as a result of heating and lighting them.

When the Government came to power 10 years ago, they promised to move taxation from “goods”, such as employment, on to “bads” such as environmental emissions. They started along that line when first in power, but since then the percentage of taxes taken on environmental grounds has reduced over time. Will the Chancellor explain the rationale for that?

That is principally because the rate of increase in fuel duty was reduced after 2000. I recently listened to one of the hon. Gentleman’s colleagues castigating the Government for that, and I was waiting for him to say, “And a new Conservative Government would, if ever elected, at some stage put up taxes on fuel.” I suspect that the Conservatives are not going to say that. When the Opposition actually come up with a coherent set of policies that would tackle the environmental challenge we face, they will have rather more credibility than they do currently.

In 2006, Sir Nicholas Stern told the Chancellor’s predecessor that expenditure of approximately 1 per cent. of GDP would be necessary to avoid dangerous climate change, which could result in the loss of between 5 and 20 per cent. of GDP. In 2008, what is the Chancellor’s estimate of the proportion of the UK’s GDP that will be spent on reducing our carbon dioxide emissions?

It is important that we follow Sir Nicholas Stern’s advice. My hon. Friend is right that his findings, which I do not think have been disputed by any serious commentator, are that unless we are prepared to make the necessary investment now to tackle climate change, we will pay a heavy price in terms of loss of GDP not just in our country, but across the world. The Government will keep that under continuous review, and the sums that we are spending on tackling climate change are reflected in the additional money that has been given to Departments right across the piece. She is right that we must make the necessary investment over the next few years if we are to tackle climate change and ensure economic growth in the future.

The Climate Change Bill does not currently make clear what the relationship will be between the UK emissions trading scheme and the European Union emissions trading scheme. Will the Chancellor give a commitment to the House that that will be made clear in the Bill before it reaches the House of Commons, and that that relationship will not make our industry less competitive than its competitors in the European Union?

As the hon. Lady knows, that Bill will be coming before this House shortly, and she will doubtless be able to express her concerns to my ministerial colleagues at that time. She makes an important point; it is important that all of us meet our environmental obligations, and it would be wrong for us to discriminate against British businesses. Is that not all the more reason for us to work together in Europe? The sooner the rest of her Conservative colleagues realise that Europe is a reality that can benefit our country, not only in environmental terms, but in industrial terms, the better it will be for all of us.

The progress that we have made on the emissions trading scheme is universally recognised. What assessment has my right hon. Friend made of the willingness of other countries’ Finance Ministers to introduce other fiscal measures to tackle climate change?

The signs are encouraging. Finance ministries across the world realise that this issue is not something that they can leave to their colleagues who deal with energy or environmental matters. Tackling climate change and dealing with these problems must be central to everything that Treasuries across the world do. I shall give an example. At the previous meeting of the G7 countries in Tokyo, we reached agreement with Japan and the United States—other countries indicated their support—for setting up a fund to help tackle climate change, particularly in developing countries. That demonstrates how Finance Ministers’ thinking has changed over the past few years; most of us realise that we must deal with the economics and the problems of climate change together.